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Everything Blockchain, Tokenization, Regulatory Requirements and more..
Tribe Digital Feature Article The Basics of Real Estate Tokenization
We are in the golden age of blockchain technology, and it’s bringing in countless innovations that disrupt, change, and replace age-old status quos all over the world.
This feature article looks at everything blockchain and introduces the new EOS500 Platform.
In the global financial industry, the effect of blockchain technology can be felt in virtually all aspects – from the institutional level of banks gradually accepting cryptocurrencies right down to the unbanked population who can now access basic financial services.
In between the paradigm shifts that defined these institutional acceptance and inclusive accessibility, the topic of tokenization comes into the picture, with real estate among the traditional assets poised for exponential growth once tokenized.
So, what is real estate tokenization and why is it important? What is its significance to investors and how does it work?
Tokenization Explained
In a nutshell, tokenization is the process of bringing real-world assets and securities on the blockchain and breaking it down into smaller units by issuing digital tokens on its behalf, with each token representing fractional ownership, rights, or equity to the asset depending on each situation.
By tokenizing assets such as real estate, we are essentially converting a real-world asset into several digital tokens that can be made available to everyone anywhere in the world – and anyone who buys the token will get to own a fraction of the underlying asset in proportion to the number of tokens they bought.
Asset tokenization is made possible today because of blockchain technology, which allows an issuer to issue tokens representing their asset on the blockchain using smart contracts and in the case of real estate assets, this is nothing short of revolutionary.
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Tokenization of Real Estate
Real estate tokenization has been a particular topic of interest for a lot of investors because of its massive potential for growth and in addressing the systemic liquidity problem that has plagued the real estate industry for years.
Since these tokens are backed by physical assets, their value will depend on the performance of the said underlying asset, just like how traditional real estate investments work. However, tokenized real estate has the added flexibility and convenience that blockchain technology provides, especially when it comes to the storage and transfer of these tokens.
Through tokenization, real estate ownership is fractionalized into tokens, which opens a range of possibilities that has never been possible before, including enhanced flexibility, more efficient processes, more inclusive accessibility, and above all, deeper liquidity.
How Real Estate Is Tokenized
As an asset owner looking into tokenizing your real estate, it is important to understand first what the token you will issue will represent, and that includes whether it’s:
- fractional ownership to your asset
- equity interest in a legal entity that controls your asset
- an interest in a debt secured by your asset
- a right to share in the revenue or profits generated by your asset, or
- any other variation that you’ve determined prior to tokenizing your asset.
This part is very crucial because the nature of the right or interest being tokenized determines which regulation will apply to the tokens you issued.
Once this part is sorted, you move on to the actual process of tokenization, which from a high-level perspective includes the following:
Choosing the platform – The real estate owner taps a platform like Tribe Digitals EOS500 that will allow them to tokenize their asset.
Tokenizing the asset – The EOS500 platform will create the smart contract that will govern the tokenization of the asset, such as how many units will be issued and what interest will be vested and deploy it on a blockchain.
Primary issuance – Once the smart contract is deployed, the asset owner issues the tokens to interested investors.
The Advantages of Real Estate Tokenization
One of the more obvious reasons to tokenize a real estate property is to raise funds for its development, just like how a company would issue shares to the company in order to raise the needed capital to expand their operations.
On a macro level, there are several advantages to tokenizing real estate and these include:
Enhanced Liquidity – The greater access made possible by tokenized real estate welcomes more market participants and ensures better liquidity of the investment.
Lower Barrier to Entry – Investors don’t have to buy the whole property in order to invest in it. Tokenizing a real estate into multiple tokens provides investors with a more affordable option to invest in the property by allowing them to purchase the number of tokens that their budget would allow.
Faster Processes and Lower Transaction Cost – By tokenizing real estate, processes are digital, happen on-chain, and generally executed by the governing smart contract, thus there are no time-consuming and resource-intensive processes or costly human intermediaries involved.
Passive Income – Tokenized ownership allows you to earn passive income from the property without having to worry about anything else other than holding on to your tokens.
Raise Funds Without Divesting Ownership – As an asset owner, you can raise the funds that you need by tokenizing only a portion of your asset so you don’t have to sell the whole property.
EOS500, the Tokenized Real Estate Project to Watch Out For
Tokenized real estate offerings are gaining ground all over the world, and with Tribe Digital Ventures soon to be released offering (EOS500) it will make the ability to Tokenize and Invest seamless with functionality that makes navigating projects seamless.
To be kept in the loop of the launch of EOS500 make sure you sign up for regular updates by downloading the Real Estate Tokenization Guide.
The Tribe Digital Podcast Listen to the Latest Episodes from The Tribe Podcast
Ep1. Caroline Macdonald Tokenization of Real Estate Assets with Caroline Macdonald, CEO of Black Tie Digital.
EP2. AUSBIZ.COM.AU Tribe Digital Ventures, CEO Chris Evans, Live Interview with Ausbiz.com.au
EP3. QUESTION AND ANSWER SERIES Tribe Digital Ventures, CEO Chris Evans - What is Real Estate Tokenization?
In this episode of the Tribe Digital Podcast, we discuss real estate tokenization, opportunities within Australia for tokenization of investments and how tokenized assets opens up investments for crypto currency holders to purchase real estate assets with Caroline Macdonald, Chairwoman of Progressive Investment Management Group (PIM).
In this episode of the Tribe Digital Podcast we had a live interview with www.ausbiz.com.au to discuss how Tokenization is changing how the world can access Investments. During the Interview with Ausbiz.com.au and Fintech Australia, Christopher Evans discusses what Tokenization is, how it works and how you can get involved.
Tokenization is changing how the world can access Investments and in this question and answer series, Christopher Evans answers the most common questions we receive at Tribe Digital Ventures.
In this episode we discuss exactly what is Real Estate Tokenization.
QUESTION AND ANSWER SERIES Tribe Digital Ventures, CEO Chris Evans - How do Asset Holders Benefit from Real Estate Tokenization?
QUESTION AND ANSWER SERIES Tribe Digital Ventures, CEO Chris Evans - Can you use Cryptocurrency to purchase Real estate Investments?
QUESTION AND ANSWER SERIES Tribe Digital Ventures, CEO Chris Evans - How do Investors Benefit from Tokenization?
In this episode we look at the benefits to Asset Holders and why Tokenization is an option opposed to standard debt raising.
More Information: Download the Real Estate Tokenization Guide at – www.tribedigitalventures.com/tokenization-guide.
In this short Q&A episode we look at the benefits to Investors in Real Estate Tokenization and Christopher Evans answers the question; Can you use Crypto Currency to purchase Real Estate Assets.
Download the Real Estate Tokenization Guide at – www.tribedigitalventures.com/tokenization-guide.
Tokenization is changing how the world can access Investments and in this question and answer series, Christopher Evans answers the most common questions we receive at Tribe Digital Ventures.
In this episode we look at the benefits to Investors in Tokenization offerings.
Why Tribe Digital? The power of blockchain & a fresh approach to investments.
SMART CONTRACTS
USER EXPERIENCE
TRANSPARENCY
OUR SERVICES Raise capital or buy shares through secure, cutting-edge technology.
Business Grow your business with security token offerings.
Technology Harness blockchain technology for a successful STO launch.
Customer service Our team us here to support
Legal We take care of compliance, licenses and legal documents.
Marketing Reach the right investors with a streamlined marketing strategy.
Consultancy Expert advice on security token offering, whenever you need it.
OUR PROCESS Asset tokenisation made simple.
Tribe Digital Ventures takes care of the technical implementation process, creating new digital assets and tokens that disrupt the way you trade on financial markets.
Analyse
We analyse your company and capital objectives to begin structuring your security token offering.
Generate
Information is stored in a smart contract and security tokens are generated.
Launch
Your campaign is launched and security tokens are distributed to your investors.
Download Our free Real Estate Tokenization Guide The traditional world of real estate is a thing of the past thanks to tokenization. Now more people worldwide can access what was once off-limits to all but the wealthiest and most experienced investors. Find out more with our "Real Estate Tokenization Guide"
Our network
The Tribe Digital Ventures Platform brings together a network of partners, businesses and investors who are developing and capitalising on security token offering structures.
